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Tully v. McLean

Court of Appeals of Illinois, First District, Second Division

May 14, 2013

THOMAS M. TULLY, Trustee of the Thomas M. Tully Trust; and F.P.A., LLC, an Illinois Limited Liability Company, Individually and Derivatively on Behalf of Old Town Development Associates, LLC, Plaintiffs-Appellees,
v.
DANIEL E. McLEAN; PIPER'S ALLEY MANAGEMENT, INC., an Illinois Corporation; LINCOLN PARK DEVELOPMENT ASSOCIATES, LP, an Illinois Limited Partnership; MCL COMPANIES OF CHICAGO, INC., an Illinois Corporation; MCL MANAGEMENT CORPORATION, an Illinois Corporation; and OLD TOWN DEVELOPMENT ASSOCIATES, LLC, an Illinois Limited Liability Company and Nominal Defendant, Defendants-Appellants.

Held[*]

In an action alleging that defendants were guilty of fraud and the breach of their fiduciary duties in connection with a development project, the case was rendered moot when the trial court’s order for a judicial sale was consummated by plaintiffs’ purchase of the development and the transfer of defendants’ interests to plaintiffs in satisfaction of the judgment without a motion to stay enforcement by defendants or an appeal from the final order granting the sale; therefore, the trial court was unable to grant effectual relief to defendants.

Rehearing denied June 18, 2013.

Appeal from the Circuit Court of Cook County, No. 06-CH-5431; the Hon. Stuart E. Palmer, Judge, presiding.

David A. Epstein, Amanda C. Jones, and Jeffery R. Beck, all of Brown Udell Pomerantz & Delrahim, Ltd., of Chicago, for appellants.

Michael H. Moirano and Claire Gorman Kenny, both of Nissen & Elliott LLC, of Chicago, for appellees.

Panel JUSTICE SIMON delivered the judgment of the court, with opinion. Presiding Justice Harris and Justice Quinn concurred in the judgment and opinion.

OPINION

SIMON, JUSTICE.

¶ 1 This matter is once again before this court following proceedings on remand from the decision in Tully v. McLean, 409 Ill.App.3d 659 (2011) (Tully I). In Tully I, Justice Karnezis provided extensive analysis of the underlying proceedings in which plaintiffs Thomas M. Tully, as trustee of the Thomas M. Tully Trust, and F.P.A., LLC (FPA), individually and derivatively on behalf of Old Town Development Associates, LLC (OTD), filed an action against defendants Daniel E. McLean, Piper's Alley Management, Inc. (PAM), Lincoln Park Development Associates, LP (LPDA), MCL Companies of Chicago, Inc. (MCL), MCL Management Corp. (MCL Management) (collectively defendants) and nominally against OTD. Plaintiffs asserted that defendants committed fraud and breach of their fiduciary duties to plaintiffs in their management of OTD. This court affirmed the judgment against defendants and the award of $4, 242, 222.22 in compensatory and punitive damages for what was described as defendants' "reprehensible" actions. In addition, the Tully I court reversed the denial of defendants' counterclaim for dissolution of OTD and remanded the matter for further proceedings. Id. at 686.

¶ 2 During the course of the Tully I appeal and prior to remand, plaintiffs initiated and completed postjudgment supplementary proceedings to enforce the money judgment against defendants pursuant to the Code of Civil Procedure (735 ILCS 5/2-1402(a) (West 2010)) and the Illinois Limited Liability Company Act (805 ILCS 180/30-20 (West 2010)) (Act). The proceedings resulted in the judicial sale and transfer of defendants' ownership interest in OTD to plaintiffs for the total amount of the money judgment. On remand, defendants filed a motion for relief in light of the reversal of defendants' counterclaim for dissolution. Plaintiffs filed a motion to dismiss the case as moot pursuant to section 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619 (West 2010). The trial court denied defendants' motion for relief and dismissed the case as moot.

¶ 3 Defendants appeal that order, arguing that the trial court erred in failing to implement the dissolution of OTD as this court ordered in Tully I. Defendants also argue that plaintiffs' mootness argument was forfeited for failure to raise this issue during proceedings in Tully I, claiming that the trial court could not dismiss the case on this basis. For the following reasons we affirm the judgment of the trial court.

¶ 4 I. BACKGROUND

¶ 5 Following a seven-day bench trial on plaintiffs' complaint for breach of fiduciary duty and fraud against defendants, the trial court issued a memorandum opinion and order on January 21, 2009. The court found defendants liable to plaintiffs for common law fraud and breach of fiduciary duty by diverting millions of dollars from OTD's accounts over a six-year period to, among other things, pay defendants' debts unrelated to OTD's business. The court awarded compensatory and punitive damages totaling $4, 242, 222.22.

ΒΆ 6 A separate hearing was held on plaintiffs' claim that PAM should be expelled from OTD and defendants' counterclaim seeking dissolution of OTD. On April 28, 2009, the trial court ordered PAM expelled and disassociated from OTD, but concluded that dissolution of OTD was unwarranted. Final judgment was entered on September 28, 2009, and defendants appealed these orders. Defendants did not ...


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